Skip to main content
4:00 am
4:01 am
here are your headlines today from around the world. banking stocks are rising in europe above 3,000 -- focus in europe turn to fundamentals. and the italian fashions, air france is looking to buy alitalia. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe.
4:02 am
>> well, apologies. banks are getting four more years to implement the changes. the basul committee says the liquidity coverage ratio designed to force banks to hold enough cash and easy to sell asset toes allow short-term market prices will include sudden equities, mortgage backed securities. previously, only government bonds and top quality corporate bonds were allowed. banks also want four more years to achieve the buffer with the basel rules taking effect on january 1st, 2019. across the board in thor row zone banks are up anywhere between .3% to 4% higher. deutsche bank up nearly 4%. joining us for the first half of the program today, steve carroll. good morning to you.
4:03 am
we can see investors like this. what are the ramifications as far as you're concerned? >> well, first of all, thank you for having me on the show. i think we should be -- as we've seen, the markets are going to see the point of view of the banks themselves. as one of the constraints on the ability of banks to extend credit and support the economy is relaxed. i think everything is equal. that should support the economy and the growth outlook going into 2013 and 2014. having said that, we don't see this as being the biggest issue and certainly in continental europe and perhaps particularly in the periphery where the growth outlook has been most negative over the last few months and quarters, it probably hasn't been the biggest constraint. so we don't really see it as a game changer either in credit creation or in growth or the
4:04 am
prospects. >> it's been suggested we should ripped up basel and start again. do you have any comments on that? >> andy's conversation is one that resinates with those of us who work in the financial industry. we live in a world of great plexty and regulation. having said that, i do also think that the idea of rules can govern a complex gibson, intellectual appealing and problems. we do need to have rules that contain some of the allegations and successes that we saw over the last date. i think right now the key is to get the balance right. but at the same time, doesn't choke off credit creation. >> it was interesting this morning, do you see a little comparison between the u.s.?
4:05 am
one of the things he talked about was the u.s. had just dealt with their bank problems after awful lot quicker. and here in europe, the eurozone is a lot further behind the curve. so one looks at this and wonders whether, you know, we haven't gotten to gribs with the fundamental problems and how much of a hint that is. >> well, i certainly agree with the idea that we're much further mind the u.s. and particularly continental europe. what's more, the banking system is a much bigger path. the banking system, that weighs more heavily on the growth and on the economic outlook in europe than it would do in the u.s. so we're hit by this double whammy on the two sides. a bigger system and a less well functioning system. at the same time, the bare dockses of where we stand in europe right now, the type of
4:06 am
measures introduced by the ecb notably over the last 18 months have been one that sort odd prevented a disastrous clash in the banking sector, so it's threatening europe a little more than a year ago when funding markets were choking up under the end of 2011. the introduction of ltos have a very positive effect on banks, unfortunately rather short lived. but it's presented a disorderly breakdown in the system which could have been catastrophic in europe. yet, by the same token, it's a bit preventive or underlying incentive for banks to make the necessary changes themselves. there's a dilemma between avoiding the catastrophic falls. >> it's a muddle through, isn't it? >> yes. >> good to have you here. let's remind you what's happened on the first trading day of the week. in eesh ya, we kick off the
4:07 am
global markets. hi, li sixuan. >> hello, ross. bourses kicked off the second trading week of the year. the shanghai composite gained a modest .4% to end at the highest level since june 2012. health care stocks staved a strong rebound after medical innovation was urged over the weekend. in the hong kong market, offsetting weakness. the hang seng ended near it's 19-month high. elsewhere, we saw profit taking and japanese exporters after a week of normality. in south korea, the kospi ended flat. but automakers managed to bounce
4:08 am
back after recent sell-offs. the australian markets pulled back after the recent rally. this after media release create ago funding withdraw proving to be faint. sensex now trading lower by .1%. >> thank you so much. we're weighted to the down side by 7 to 3. but european stocks starting the day in first new highs for banks. not the best christmas trading update today. the xetra dax you was up .1% on friday. currently down .4%. the ibex is fairly flat. it was up about .5%, as well. and the ftse mib is up abo
4:09 am
about .2%. banks are the best performers today. on the bond markets, after hitting that eight-month high of 8.911% on friday, barrels record and a pretty good ism services number, italian yields and spanish yields pretty contained. on the currency markets, a bit on profit taking setting in there. we're now at 97.69. euro/dollar, we hit just below 1.30 on friday. we keep our eyes on those markets. meanwhile, the italian legend could be set for another twist after sylvia berlusconi's party announced it was close to announcing an alliance with the northern league which would mean that democrats let by pasani would be denied a majority of
4:10 am
the senate and that would force them to make their own alliance. this after the weekend suggests monti would come third in the election with up to 15% of the vote. let's move back down to the desk and continue our discussion. we saw the declining yields since berlusconi left. well over 8%, actually. and now we're just at over 4%. how much is the fact that we may get an undecided election, what will that do for sentiment around italy? >> i agree that the risks to the rally we've seen in italian income. i think the biggest risks in the short-term are political risks. in the end, i think the election situation in italy is staying pretty much as we expected.
4:11 am
we expect any party would achieve an absolute majority in both houses and the italian parliament and be able to run as a coalition. i think the rule is that combination is one that is reasonably positive for the markets and reasonably positive in italian bond prices over the last year. >> is it your contention that actually they'll be the same relative degree of comfort in 2013? at the same time, we've had a big gain? >> well, i think how much value there still is in italian bonds, i think, you know, we have to be a little bit skeptical that there's a lot of value there. certainly what we've seen over the last year or so. having said that, i mean, i
4:12 am
think italy is a country which has spanned the benefit or has benefited a lot which we've seen from the introduction of the omt by the ecb. and the italian bear is domestically held. italy is running a family fiscal surplus. and that combination, together with the fact that italy is a country as a whole has a relatively small debt. i think it allows it to roll its debt. >> we can see the impact there, sort of late july when mr. draghi after those words, believe me, it will be enough. and there's the impact of it. will the omc actually be launched at some point? and i don't know why anybody in spain would ever want to ask for it. but at the moment, it's yielded where they are. >> i think that's right. we have generally been of the opinion that a request from the spanish side in the first instance would be made and we've been wrong about that so far. so i think we are expecting now
4:13 am
that request to come, but later rather than earlier. i think in the end it probably does come from the markets beginning to question whether the delicate equilibrium where people don't want to go short peripheral bonds and the knowledge that the ecb would come in and push yields back down. it leaves new the sort of delicate situation. we are of the opinion and something here in the spanish case and the italian case, spanish fundamentals we don't see as positive in italy. there they still have a very big fiscal deficit and foreign ownership in the upcoming maturities is higher. and given that combination, if the foreigners don't roll over their debt completely, and given this continued need to finance the sector spending in spain over the next year, year and a half or so, the financing needs are very large. and but towards the middle of the career, we think that will
4:14 am
push change needed. >> there is a theory that they might be able to try and get beyond the german election. it's such a political story. do you agree that that would be a target, not necessarily achievable? >> i think it's a target. i think certainly ahead of the election given, as you say, very intense political nature of these types of infractions. i think both sides would appreciate getting through there. i think probably we'll see that sometime in the second or third quarter. >> all right. please stick around. first, now the proud holder of a russian passport, we want to
4:15 am
know if you have to go into tax exile, what would be your country's choice of passports? if you want to get into the conversation here, please e-mail us, worldwide at, tweet us, @cnbcwex or even tweet me directly. plenty more to come on today's "worldwide exchange." see you in a moment.
4:16 am
4:17 am
4:18 am
some of the stories in asia this morning, a white haven coal had a trading session, currently down 9% which wiped out much value before recovering the reason, a fake press relief claimed that a bank had withdrawn a $1 billion loan to the miner. the australian securities commission has now launched an inquiry into the issue. it's the third time in the last month that false statements against an australian company has been released.
4:19 am
stocks are up sharp for sharp. operating profit is key to secure funding. the comments came out after the markets closed. sharp shares dropped more than 4% today along with other exporters. despite uncertainty over the economy for 2013, one company in south korea has announced aggressive investment plans to try to get ahead of its rivals. for more, we're joined by rea young in seoul. hi there. there, ross. this is korea's fourth biggest condmrom rat, lg group. the group has decided to take a preemptive measure and invest $18.8 billion this year in anticipation of a rapid market recovery. they hope to lift the domestic economy by adding 15,000 jobs
4:20 am
this year. the mistaken benefit is lg display, lg electronics as well as the telco unit and chemicals arm, together they will enjoy $13 billion in new investments and to boost production and the $6 billion will be used in r&d. a big chunk of it will be going into research, advanced technologies, smartphone software, high definition and smart tv products and total lg group investments in 2013 will be about 19% higher compared to 20 st 12. back to you. >> okay, rhea, thanks for that. meanwhile in europe, air france klm is working on taking a controlling stake in air italian. the air alitilii shares have jumped after the report. italy's newspaper says air
4:21 am
france is offering a 20% premium on the price that is agreed to pay. investors have declined to rule out the report. the chairman of roach says he's walking away because of an unrealistic asking price. it's the second time roche has given up on illumina. and it was a 2013 fiesta for ticket holders across five regions of spain last night. the nation's annual epiphany lottery dropped $8 million. 20 years and compared. there's a 20% tax and earnings above 2,500 euros, applicable for the first time.
4:22 am
and the ecb reportedly is still having problemsing managing collateral. too much credit has been granted to banks because of insufficient haircut owes short-term bonds. used as collateral to obtain central bank funds. hugh is still with us. the ecb is still having collateral problems. how much of an issue is accepting collateral grade beam for them? >> well, i think on the specifics of these small examples, it's a relatively small concern. a lot of these banks are overcollateralized in a few ways. but more broadly, i think the fact that the ecb is being forced into accepting more dubious collateral through time, of course, is a sign of the times, a sign of the fact that financial markets are not working very well and the ecb is being forced to take a great responsibility to intermediate between banks and accept assets in a well functioning and well
4:23 am
behaving world where a central bank would be advised to be accepting. i think that's a symptom of the fact that the ecb have been forced into an exceptional nature. >> how does this pan out the first half of this year? we've seen the eurozone economies in contraction territory. there will be those who say we can get full blown qe. we're going to be japan style. what's your view? >> we have the ecb with rates on hold, which goes a little bit against that scenario. and we don't really think we're going to see a full blown operation across the euro area as a whole. it's certainly true that the eurozone area weakened in the last year and we think that will continue. i think it's key to distinguish between the different components of the euro area. the core has slowed down. germany has slowed down.
4:24 am
and i think we can anticipate probably a stagnant german economy, maybe even contraction in the fourth quarter. but we see that as a very temporary phenomenon towards tend of the last summer and the inventory cycle associated with that. and looking to the middle of the next year, we have the u.s. economy beginning to grow more strongly, towards 3%. we had the chinese economy and emerging worlds growing more rapidly. and germany is very close to the global trade. we do think germany will come back towards trend. >> what's behind that? >> well, i think it's partly based on the idea that we will get through the fiscal cliff. but more fundamentally, it's based on the idea that we continue to see a policy being enacted by the fed, which we expect will continue through this year.
4:25 am
we think they will continue to expand their balance sheets and cumulatively, it will expand by $1 trillion through the course of this year. associated with that and going back to some of the comments you've referred to this morning, the house view is that the private sector in the u.s. is much more advanced now. and some of the overhang problems with debt and housing and inventory says housing has cleared out. we expect housing to come back and that will be a portion of personal consumption and private equity going through the course of the year. of course, it's precisely that lack of adjustment in the private sector that you'll see continued deaf leveraging in europe and that will weigh on spending relatively speaking.
4:26 am
>> i'm curious what happens to france here. >> we see continued divergence between peripheral and core in general. our view on germany, for example, is that we'll see something of a bounce back from the period of weakness in the second half of the year. the german economy will benefit from global growth and it will benefit from the easing conditions which has been established by the ecb which will support the personal consumption and housing in germany. so those that are looking domestically we think will do relatively well. having said that and going back to our brief discussion in italy, the worst of the contractions in italy are probably now behind them. uncertainty can be navigated
4:27 am
unsuccessfully. we think the italian economy will begin to stabilize next year. we're a bit pore pessimistic about spain. >> and can you guarantee it's going to come into play? >> yeah. and i think the omt will probably help italy because it won't be a direct beneficiary of it. that will help calm markets, support markets in italy and i'll have italian banks to regain funding. the facts that the ecb made purchases through the banking system that it can't operate directly in markets will to some extent crowd out private sector credit creation in spain. but to your point on france, we don't have a very optimistic view on france. 2013 is a year of stalling nation in france. but having said that, we don't think the financial sector is going to be some of the same tensions we've seen elsewhere. the liquidity situation is so ample.
4:28 am
investors have to find some sort of space longer duration assets. >> and the french will provide that. thank you for joining us today. nice of you to come back. still to come, despite recent concerns over the uk economy, starting 2013 in an optimistic mood? we'll find out why in just a moment. [singing] hoveround takes me where i wanna go... where will it send me... one call to hoveround and you'll be singing too! pick up the phone and call hoveround, the premier power chair. hoveround makes it easier than any other power chair. hoveround is more maneuverable to get you through the tightest doors and hallways. more reliable. hoveround employees build your chair, deliver your chair, and will service your chair for as long as you own your chair. most importantly, 9 out of 10 people got their hoveround for little or no cost. call now for your free dvd and information kit. you don't really have to give up living, because you don't have your legs. hoveround replaced the legs.
4:29 am
and now every hoveround comes with this handy tote bag and cup holder for access to your favorite items. and right now, get this limited edition hoveround america travel mug free with your hoveround delivery. [singing] hoveround takes me where i wanna go. call or log on to to find out where a hoveround can take you!
4:30 am
4:31 am
these are the headlines from around the globe. banking stocks in europe on the rise. relaxes rules for global liquidity requirements. the s&p 500 starts the week at a fresh five-year high. u.s. investors now off the fiscal cliff. and aircraft klm is reportedly in talks of a possible takeover for air alitalia. stocks soar after the news. started of a new trading week, european shares pulled back slightly. the ftse 100 down about .3%. the xetra dax and cac 40 down
4:32 am
about .14%. the ibex in the positive .3%. gilt yields still over 2%. 2.1% is where we stand. jpd just over 5%, the ten-yield at 4.2. on the currency markets, dollar/yen, we hit, what, 88.48, the high since 2010 on friday. euro/dollar, just above 1.30. it was just below it at the low point last week. a survey by reuters says economists are starting the year 2013 in a relatively optimistic mood. i wonder whether the key word is relative. how were they last year? >> what we're seeing in this survey is that opt on mimp has
4:33 am
picked up quite a bit in the last six months. looking behind the headline numbers, what seems to have happened is there's a pretty big fact in expectations of the break-up of a single currency. a year ago, that was a dominant concern. there's more confidence about the outlook for growth in the uk and europe, as well. >> and despite that relative change of optimism, there's still incentives, though? >> yeah. >> it's not going to translate into any big action? >> what we've seen with the survey is that sentiment really does seesaw on the basis of what's happening in the macro economy. so you get a shocking europe and sentiment tanks. you get good news from europe and sentiment picks up. what we've found is that the strategies that companies are actually following, much less volatile and we've seen a steady drift over the last two years towards the defensiveness. so the paradoxes that corporates are more upbeat than a year ago,
4:34 am
but actually, the way they're running this balance sheet is more defensive. so they're more focused on cost control, more focused on building up cash. >> what are they going to do with that cash? you know, not investing it in large sway and there are a number of, you know,ñ.ñ investo that have come around. might well start to climb back their stock if they kaevent find anything to do with it. >> i think what we're seeing is that corporates have strong balance sheets. and one of the reasons sentiment is fairly strong at the moment is they have decent balance sheets. i think that what happened in 2011 a recovery was derailed by the euro crisis. cfos, the corporate, the economists were all wrong footed by the downturn in 2011. i think cfos will need a more confident recovery to start switch to go m&a and cap ex.
4:35 am
i think they'll be content to run fairly high cash balances. and i think that's in a sense a logical response for a world which is still perceived as being pretty uncertain. >> yeah. and you mentioned the funding. if they want to get funding, it's cheap, right? they have time to do stuff, right, if they want to. so when a corporate is going to buy growth, how are they doing it? where are they looking? how collective are they? >> what we're seeing is that companies which have a strong presence outside europe are generally more upbeat, more willing to take risks in companies which focus on europe and the uk. and we also see -- i think this is counterintuitive, is that had a of cfos think even in tough times, there are things they can do, provide opportunities to advance your week's competition, to take market share, to do things they couldn't do in short times. so this isn't saying that cfos close down the door to growth.
4:36 am
i think what it does suggest is that they're having to be much more selective and that they know they can't count on a perpetual up escalator to boost their revenue. >> and they saw the government sticking to budget policies. how does that affect sentiment? >> to what extent the cfos think there are things the government can do which will improve the environment for expansion. what was interesting is that cfos are relatively happy with monetary policy. >> they tell us credit is lower than it has been focus five years.
4:37 am
but the concerns seem to be around things like infrastructure, energy policy and immigration and in particular, the general level of regulation. so what cfos are saying to us is what worries them are things more around the microsooidz side of the economy. >> business hasn't really come up with a view for that, hasn't it? >> we'll see what comes out of that. >> thank you for joining us. if you have any thoughts or comments, please e-mail us, we're getting more details on japan's xlumtry budget. kitadai-san, hello. >> hello, ross. the government has compiled an outstanding for fiscal 2012
4:38 am
valued at more than $14 billion. the new liberal democratic led government plans to spend a large portion of the funds on public projects. the budget will focus on targets to introduce resistant construction standards at schools and hospitals, plus provide funds to repair aging roads and water pipes. the extra budget includes funds for ads 1.7 billion lending scheme to encourage firms to develop new technologies and pursue overseas m&a. the lending scheme is part of a stimulus package expected to be approved this week. the abe administration plans to issue government bonds, the first such issued in three years. back to you, ross. >> all right. have a good evening there in tokyo. staying in japan, car measures continuing to suffer from falling sales in china last
4:39 am
month. but the pace of the decline has seized quite a bit. back at home in japan, auto sales down in december from a year earlier. honda, the worst performer. its sales down nearly 40% mainly because of a lack of new policies. but overall, the sales numbers for 2012 up 26% year on year. it's the first annual -- for two years. diaggio's open in india have been delayed. indian regulators have requested more detail. it's part of the proposed $2 billion acquisition of a majority stake in the indian liquormaker. talking of india, many analysts
4:40 am
suggest global makers face a tough challenge when trying to crack emerging markets. hi, kevin 37 good to see you today. and just how different are drinking patterns in the likes of on china, india, indonesia? >> for eye merging markets like india, more than 50% of beer, wine and spooert bills, india will have more than half bridges going to spirits. this is part of the low price, low kospi risk that is driving consumption. we looked at china, we looked at thailand. there was more than 1% of sales going to spirits. so in terms of other types of alcohol, it will mainly be beer,
4:41 am
beer from the majority of the consumption and if we look back at how india or how philippines or how thailand is, even though beer is huge, even looking at the spirits, the high alcohol content will be drinking a lot of alcohol. and for wine consumption in the emerging markets, the majority is still -- this is because most of the consumers in emerging markets do not know much about wine. so it's only limited to the more affluent or the well traveled that will be consuminging wipe. >> so wine is struggling. on the spirit side, what are the -- sort of the spirits that are going to win out? in those markets that are the most developed in the region, is it gin, vodka? what are the types of spirits
4:42 am
that are going to get most of the markets? >> okay. so in india, you have a lot. indian local spirits, so they have a lot in whiskey. this price relatively cheaply. so with the high alcohol content, it sours easily. china, they also have their own local chinese spirits. this is usually priced with the spirits such as your kospi. so one thing that you can do in growth of spirits, there is a lot of brands sent to attract a very high tariff. so it is very high. so it's cooked consumption of spirits in india or china. >> yeah. okay. so the vodka is going to do well. so what does that mean for -- you know, if you've got these cheaper spirits, how hard is it for the premium western brands to crack the market?
4:43 am
>> i would say at the moment, it would be difficult to crack. but actually, if we are looking in the longer term, all these cheap, local spirits will help pave the way for the processed spirits. all these cheap local spirits are paving the way. they are creating the demand. so they are getting the market ready for consumption of spirits. so eventually, in the emerging markets, incomes would increase, they will have more income to spend. so it will be human nature to want to spend a little bit more on the luxuries of life. so consumers will be willing to trade up when the time comes. >> local spirits, in other words, are sort of like a -- you know, they're paving the way for the more expensive branded spirits. >> yes. they are literally paving the
4:44 am
way, creating the brand. so the other international companies, all they need to do is not to view these local spirits negatively because they have been been -- in the long run. >> good. i feel like going to force myself a single malt right now. kevin, thanks very much for that, kevin chan, head of research at euro monitor. now, banks must miss their capital plans today as part of the government's latest rounds. the ceo michael corbett is expected to be conservative. citi is expected to buyback a minimal number of shares and won't is ask for a dividend hike. it's up 2% this morning helped out by the basel deal, no doubt. congress is gearing up for the next fight over whether to
4:45 am
raise the u.s. debt ceiling. that's expected to come sometime in february. democrats plan to push for a balanced approach for more tax revenues for the rich as well as spending cuts. senate majority leader mitch mcconnell is ruling out any tax hike. >> the tax issue is finished, over, completed. that is behind us. now the question is what are we going to do about the biggest problem confronting our country? and our future? and that's our spending addiction. >> if mitch mcconsl going to draw that line in the sand, it's a recipe for more gridlock. we have to take a balanced approach to long-term deficit reduction. >> republicans want big cuts in programs like medicare and social security as a condition for raising the debt ceiling. and u.s. regulators may announce a $10 billion settlement today over bad foreclosure practices. the "new york times" first reported the deal last week said 14 banks, including citigroup, jpmorgan and the bank of america are involved.
4:46 am
nearly $4 billion will go to people who lost their homes in 2009 and '10. the rest will be for those in the process. the times says the fed threatened to block the settlement, demanding for money from banks for their reason in the financial crisis, but has since back down. and a reminder of what on the agenda in australia tomorrow, falling resource revenues have been widening their trade deficit. and it's also in focus with samsung electronics, expected to release it's delayed guidance. at the same time, japan's retail giant will unveil their q3 forecast, as well. and december faels figures are due from taiwan. auoptronics and umc. still to come, our next guest expects a 10% price drop in aural commodities over the new year. we'll find out why in just a
4:47 am
4:48 am
4:49 am
it turns out he turned his back
4:50 am
on his homeland since the next tax. he received his russian passport as well as you can see a hug from the president. probably not easy to do to hug him. stephane is in paris. you have to have big arms to try and hug gerard. >> long, long arms. very long arms. >> i'm not quite sure why he's gone for a russian passport. i don't quite -- i thought he was going to live in belgium. anyway, how is this all going down? >> there's a fiscal agreement between france and russia in 1996 and he's in the still position when it comes to fiscal residence. the main criteria is the usual place of residence. in other words, if he still spends more than 50% of his time in trans, he will still have to
4:51 am
pay taxes in this country. in case there's a second criteria, what we call the center of vital interest, basically, it's where your family leaves and then comes the position. that being said, of course, the story was all over the media this weekend in france. most were not on the -- side. also the fact that he was offered apparently a minister position at the local level. there were a lot of sarcasm in france about this offer. now, we have a fiscal comment. he said it was said that gerard decided to leave the country. but he also indicated the government was about to revamp its plan to implement a 75% tax on the richest people.
4:52 am
since it was rejected by constitutional court and he indicated that probably the government will drop 275% tax rate because it could face another rejection. but we are waiting for another tax for the super rich. but guess what? it won't be 75%. >> no, okay. i do remember there was a film that launched him, jean du florette. >> oh, yes. >> that was the one that i remember that sort of launched him out there. right. thanks for that, stephane. so gerard is now the proud holder of a russian export. we want to know if you had to go into tax exile, which country would you go to? e-mail us, or you can do it via twitter,
4:53 am
@cnbcwex or direct to me, @rosswes tgate. >> the proposed 75% top rate of tax is now scheduled for revision was designed to incite a bit more prudence and decency in a few very rare executives. decency. that's interesting, trying to legislate the decency. >> now, we will be talking about this. this is where we stand at the moment. remember over the last three months, wheat down 13.5% in the last few months, soybeans down 9.78% and corn down 8.45% in the last month, as well. we have a guest coming on who sees agriculture prices falling
4:54 am
between 10% and 13% over the first quarter of this year. aaron will join us in a few moments' time. before we do that, le recap where we stand right now. the ftse was up .5% on friday. it's dup currently down .25%. the xetra dax down .4%. cac 40 down .4%, as well. ten-year yield is still coming back slightly, but still, still above that 2%. treasury yields have come back absolute lit to the eight-month highs we've seen on friday, which is 8.19%. had a yield around 1.88%. so banks to soft commodities, aaron is with us. good to see you. >> thank you. >> i just read out all the prices. quite a three-month decline for the major stocks. do you think that is going to continue, do you?
4:55 am
why? >> actually, i think the price moves we've seen lower are too much too soon. so we expect price toes recovery. we've seen a lot of speculative selling. so a lot of speculators picking risk off the table ahead of this report. >> what are they going to report on? >> so friday we have the monthly update of supply and demand balances globally. we also have the final production number for u.s. grain and oil crops and quarterly stock levels in the u.s. >> there's a lot in it, f+uu>ú@iás+c&'a"j,n%s[uj yes. >> so i understand caution ahead of it. what are the funds beyond that report? >> well, the most important number that the market is looking for on friday will be the corn stocks report. trade estimates show that corn and soybean stocks are expected to be 15% below year ago levels in the u.s.
4:56 am
we think that the number could move potentially lower than that. so we're really looking for how much demand has been used in the first quarter of the marketing year, which will ultimately be reflected in this stocks number. and we are looking for it to be down more than 15% from year ago levels. >> great. okay. and is that priced in? is that sort of in the price or not, do you think? >> with this recent sell-off, we don't think it's in the price. we continue to see animal numbers in the u.s. and ultimately see demand running at higher than the pace needed to be stock levels. and we also are very concerned about whether for the upcoming -- in the u.s. if you remember one year ago, there is about 19% of the u.s. in severe to exceptional drought. at this stage, we're at 42%. last year, we had the worst drought in more than 50 years. the drought conditions were better than they are now in the u.s. so we need to have a significant
4:57 am
improvement in rainfall in the coming months. >> wow. okay. we're worse than we were when we got the drought last year at this particular moment. >> >> okay. so that lays out that implication. what do you do as an investment strategy, then, as you lay your cards out? once you get beyond this report, what becomes the key flank of your investment strategy? >> we think across the board grains and royalties are undervalued in the short-term, particularly the grain market, the soybeans, we have seen an improvement in weather in south america. so soybean production is likely to recovery and replenish stocks sooner than the grains market because of the large south american soybean planting. as we move further into this season, the weather is going to be the key factor to watch. if we don't improve, then we do expect prices will remain at elevated levels. we are expecting production to rebound as we move further into the calendar year.
4:58 am
in the short-term, still, prices look oversold. >> just to remind you, we ue to follow soys on air. france and air alitalia, as well. air france klm denies reports they're in talks to take over alitalia. ks "worldwide exchange" continues after this. [singing] hoveround takes me where i wanna go... where will it send me... one call to hoveround and you'll be singing too! pick up the phone and call hoveround, the premier power chair. hoveround makes it easier than any other power chair. hoveround is more maneuverable to get you through the tightest doors and hallways. more reliable. hoveround employees build your chair, deliver your chair, and will service your chair for as long as you own your chair. most importantly, 9 out of 10 people got their hoveround for little or no cost. call now for your free dvd and information kit. you don't really have to give up living, because
4:59 am
you don't have your legs. hoveround replaced the legs. and now every hoveround comes with this handy tote bag and cup holder for access to your favorite items. and right now, get this limited edition hoveround america travel mug free with your hoveround delivery. [singing] hoveround takes me where i wanna go. call or log on to to find out where a hoveround can take you!
5:00 am
5:01 am
xxxx hello. this is "worldwide exchange." here are your headlines from around the world. the s&p 500 starts the week of fresh new high as investors are selling their focus on the fiscal cliff and fundamentals. earnings season kicking off this week. banking stocks on the rise in europe. the basel committee bow toes pressure from the financial services industry and relaxes rules for global liquidity requirements. air france klm denies reports it's in talks about a full takeover of alitalia. the stakes holder has been soaring on the news. week to the start of your global trading week here on cnbc. the s&p having its biggest
5:02 am
weekly gape in a year last week, up to five-year highs right now. right now, pretty flat open. down 1.5 points, so about 4.5 points below fair value at the moment. the nasdaq was pretty flat last week. at the moment, it is currently .5 points below fair value. and the dow at the moment is some 34 points below fair value. it was up about .3% last week. as far as european stocks are concerned, the ftse cnbc global 600 just down slightly. the ftse 100 slightly down. the xetra dax, as well. and the ibex is up 10 points, as you can see. on the currency markets, keep our attention on what's going on with treasury yields. we hit 1.9% last week on ten-year treasury yields. there you can see. and we're at 1.90% at the moment. just a little bit below that
5:03 am
eight-month high. we hit towards tend of the last week. steady yields for italy and spain. the 5% mark, 5.08%. on the currency market, dollar/yen is taking a lot of focus. we hit that 1.2990. we hit 88.48 on last week. you can see at the moment, 87.76. we're at the july 2010 high on dollar/yen. euro/dollar, just below 1.30 last week. just above it at the moment. 1.3034 is where we stand. with that, here we are with european trade. let's remind you on what's happening in asia. li sixuan joins us. >> thank you, ross. asian markets picked up the second trading week of the year on a low note the the nikkei 225 snapped it's winning streak to close .8el% lower. investors took profits on exporter stocks. utilities stocks tumbled after nomura securities downgraded its
5:04 am
ratings on some power utilities companies. the chinese bust the trend ahead of trade numbers and cpi data due later this week. the shanghai composite gained a modest .4% to close at the highest level since june 2012. health care stocks rallied after china's premier over the weekend urging investment in medical innovation. but developers left the announcement for companies involved in housing projects. the shares outperformed in the market. the sang second ended flat near it's year high. meanwhile, the australian markets took a breather after the recent rally. as much as 9% after e-mails claimed a miner has lost funding for one of its project, but it recovered most of its losses
5:05 am
after refuting the claim. back to you. >> thanks for that, sixuan. that's where we stand then before the u.s. kicks off today. kevin gardener is head of investor strategy at barclay's. happy new year. >> happy new year to you, as well. >> we've got rid of some tail risk in the short-term. we did go over this cliff, but not very much, temporarily in the u.s. we haven't had a hard landing in china. the s&p up to five-year highs. the dax up, what, 30n a year or so? and what happens now for equities? >> as much as i'd love them to be and as much as i'd love to stay seven points clear at the top of the championship, i suspect things aren't going to be quite that straightforward. some volatility is probably a safe bet. you know the public spending is not resolved yet. the debt ceiling has still to be
5:06 am
tackled. in the euro area, i can't believe appreciate politicians are going to keep quiet through 2013. i guess the key thing is, what do you do for those setbacks? for us, we would look to trade those setbacks positively. so we're looking for an opportunity to move into equities in particular, not netsly to restreet for them. okay. so are you suggesting -- i mean, the number of people are saying, look, the next month or so, we get a green light and we're going into earnings season. we get a green light for equities. and companies are going to be fundamentally supported. so they're going to -- particularly in spain, use their cash to keep buying back stocks. >> i think they will. i think they'll buy back their stocks, they'll pay bigger dif dens. as confidence comes back, they'll buy each other. so the takeover story will gather momentum. they may even start investing in more fixed assets and generally, you know, expanding their businesses. i think all those things will happen. don't get me wrong, we're pretty
5:07 am
constructive on both the u.s. economy, the corporate sengter and developed economies globally. investors never move in a is straight line. when something looks like a racing certainty in the short-term, it's often the time that it isn't quite such a done deal. >> no. well, that's always a fair point, of course. so let's talk about bagsel. they've given banks four more years to implement the changes. and we take a look here, i can see all the eurozone banks this morning, doing pretty well. deutsche bank up 4%. is this just a -- is this a one-day trading or does this change in the short-term the investment outloor for these guys? >> i don't think it changes it profoundly. i think it's more of a short-term one-off adjustment, this particular announcement. but that said, i think the quality of bank balance sheets
5:08 am
generally -- and today is more about quality than quantity -- i think the quality of balance sheets is going to improve. and even though the longer term regulatory outlook is still pretty tough for them, i suspect that the financial sector is going to at least keep pace with the wider equity markets. we haven't yet got the nerve to make the european sector overweigh. but, for example, to the states, which has had other issues in its banking sector to worry about. they've made some big adjustments and that's the financial sector that will continue to beat the markets. we don't yet have the nerve to say longer term this is one of the big outperforming sectors in europe. >> talking about the earnings season, how constructive or not is that the going to be for your case? >> i think the earnings season is often misreported in many ways. we think that short-term moves
5:09 am
by companies move the markets on the day. you know, more often than not, analysts are steadily downgrading their expectations to each calendar year. that goes back to the 1980s and subsequently. of course, the stock market doesn't go down every single year. it felt like it for a brief period a few years back, but the stock market doesn't price generally what analysts are talking about. and my suspicion is that investors are still actually much more cautious about profitability than analysts. so i think whatever happens in the short-term day-to-day movement, even if analysts trim their numbers, i don't think the earnings season will turn the market around. >> all right. kevin, stay there. get a cup of coffee and we'll come back to you in a few minutes. we'll get a look on the u.s. dollar and more.
5:10 am
on the agenda in the united states, a lighter week for data. tomorrow, we get november consumer credit, alcoa kicks off earnings season with its fourth quarter results, as well, after the close. on thursday, it's weekly jobless claims and wholesale trade while on friday we get the november trade deficit and december import price peps banks have to submit their capital plans to the fed today. it's expected to be conservative. "the wall street journal" says he will ask the fed for foermgz buy back a minimal number of shares and won't is ask for a d dividend hike. banking regulators have watered down liquidity rules.
5:11 am
they've given banks four more years to implement chaungs. the liquidity coverage ratio is designed to force banks to hold enough cash and easy to sell assets to divide a short-term market capital, will include corporate debt and residential mortgage backed securities. the difference is previously only government bonds and top quality corporate bonds were allowed. banks want four more years to accumulate the buffer with the basel rules not taking effect until january the 1st, 2019. what do you think of that? if you want to join us here on "worldwide exchange," get in touch, e-mail., tweet @cnbcwex. still to come, the u.s. consumer has been quietly recovering. we'll take a look at how rising confidence may impact the global economy in 2013. ♪ [ male announcer ] how do you turn an entrepreneur's dream... ♪
5:12 am
into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece? ♪ whatever your business challenge, dell has the technology and services to help you solve it. [ male announcer ] how could a luminous protein in jellyfish, impact life expectancy in the u.s., real estate in hong kong, and the optics industry in germany? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing.
5:13 am
5:14 am
and a recap of the headlines today, ininvestors focus from the fiscal cliff to fundamentals as the s&p 500 starts the week at fresh five-year highs. regulators water down bank liquidity rules giving a boost to financial stocks in europe. and no takeover for alitalia
5:15 am
right now. air france denies it's trying to buy the flagship carrier. so the -- fairly dry on last week's deal to avoid the fiscal cliff. but congress is gearing up for the next hike over whether to raise the u.s. debt ceiling. it's expected to come sometime in february. democrats are planning to push for a balanced approach. but the senate minority leader mitch mcconnell is ruling out any further tax hike. >> the tax issue is finished, over, completed. that is behind us. now the question is what are we going to do about the biggest problem confronting our country? and our future? and that is our spending addiction. >> if mitch mcconnell is going to draw that line in the santd, it's a recipe for more gridlock. we have to take a long-term approach to u.s. deficit reduction. >> "new york times" which first
5:16 am
reported the deal last week said 14 banks, including likes of citi, jpmorgan and bank of america are involved. nearly $4 billion will go to people who lost their homes in 2009 and '10. the rest will be for the foreclosure process. the times says the fed threatened to block the moves. philly fed president says a $3 billion balance sleet could codo harm to the u.s. economy. he plosser says that could lead to a rise in unemployment or more stability. he's long criticized the bond mortgage push chass. u.s. consumers have been stave ago recovery, quietly getting on with the job of supporting their economy. that's according to barclay's, which says the u.s. economy now has the potential to drive
5:17 am
global growth in the year ahead. kevin gardiner issued that call and he's still with us. kevin, why are you feeling that optimistic? >> well, we think that against the u.s. consumers balance sheet is much stronger than people realize. there's the need for widespread deleveraging, the idea that consumers have to get rid of the debt from their balance sheets. it was very much in the financial sector. the consumer's balance sheet is in aggregate. net worth is strongly positive and that's going to underpin their spending power and their confidence. gradually, you're starting to see the labor market improve. these things will gradually come together and we think we'll see recovery as we're going forward. we think consumers may pick up that pace a little. >> yeah. who is going to feel the benefit of that most?
5:18 am
>> i think since the u.s. economy. but one of the most important things about the u.s., even these days, is the consumer in particular. we enable the u.s. consumer customer number one for global business. because although the u.s. economy benefits initially, u.s. consumers will import more from the rest of the world. so companies and countries selling into the states, and this would include quite a few asian manufacturers in particular will do quite well from this. so too will european companies. sometimes it's correlating the u.s. german stock market with the domestic economic variables. so it will keep the global economy moving along quite nicely, also. >> and with the emerging area, which is the area that will benefit most from that? how much has this helped china house? how much has it helped the china market massive underperformers next year? >> well, we're hoping that it
5:19 am
will and it will be one of the factors that will help the chinese stock market. for us, china is one of the most attractive of the emerging equity markets. still, there's reasons it's lagged behind. it isn't just about the u.s. consumer. there have been some domestic issues and what they're going to do with that position. the government, though, they're going to take those things into the market and that can hold the market back somewhat. but the u.s. consumer will help the chinese equity markets. lit help some of the markets in asia. so korea and taiwan. these are almost developed markets these days, but they have a group and several initials of industrial strength which will do tremendously well if the u.s. consumer continues to grow. >> you're generally contractive on equities, generally constructive on the u.s. economy in particular. we also, though, think the
5:20 am
dollar is going to perform best. that means we have to see a change and it has to be the risk off currently. >> that's exactly what we're saying. we're effectively saying that the drivers of foreign exchange markets may change through 2013 and the dollar to date has been very much a safety first safe haven currency. we're thinking going forward, it will become more of a pro cyclical pro risk currency and that has happened before. you have to go back quite some way, but if you go back to the early 1990s, around about 1994 and thereafter, the u.s. dollar started to outperform other currencies in a climate in which equities were outperforming and which u.s. growth in particular is bag goes back to a pretty strong phase. and we're expecting something of that to start unfolding during 2013. >> that would be a big take up, couldn't it? kevin, always good to talk to you. >> thank you. we'll take a short break. still to come, is your bank
5:21 am
account vulnerable to hacking? we'll talk to a guest who says lenders need to do more to boost cyber security. ♪ ♪ ♪ [ male announcer ] some day, your life will flash before your eyes. ♪ make it worth watching. ♪ the new 2013 lexus ls. an entirely new pursuit. the new 2013 lexus ls. are you flo? yes. is this the thing you gave my husband? well, yeah, yes. the "name your price" tool. you tell us the price you want to pay, and we give you a range of options to choose from. careful, though -- that kind of power can go to your head. that explains a lot.
5:22 am
yo, buddy! i got this. gimme one, gimme one, gimme one! the power of the "name your price" tool. only from progressive. what are you doing?
5:23 am
nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office.
5:24 am
australian miners white haven has had a sdifkt trading session today. the reason? a fake press relief from a local anti-coal activist. this fake press relief claimed that a bank had withdrawn a 1 5 $1.25 billion loan to the miner. it's the third time in just the last six months that false statements about an australian listed company have been released. meanwhile, according to some security experts, banks may be among the best protected companies against potential cyber attacks, but as the recent state of service disruptions have shown up, they are by no means immune to hacking. david, zahn, thanks for joining us. there will always be attacks. there will always be instances
5:25 am
that are unsuccessful. this is a never ending issue? >> you're right, it is. it's almost a tit for tat arms race consumer, companies and governments against hackers. >> so are the banks, therefore -- you're never going to be quite doing enough, are you? >> well, i mean, they need to always be on their game securitywise. you need to always be evolving your security practices. but, again, it may be a more kwofbive issue among governments. you know you're coming under attack in one nation and we're getting better and better at detecting who is attacking us in realtime and being able to say to the government in that nation, we know your government is coming under attack. help us out, lease. >> is this about trying to steal
5:26 am
stuff or is this more of disruption? >> the pnc attacks are more disruptive. they're designed to be a nuisance. they're not designed to go in and steal information or money. hackers could go in and steal information and destroy confidence in the financial system. but they're not doing that here. this is just where they're basically making it annoying for people. people can't access their bank accounts online when they want to. they're not going in and manipulating data or stealing money. >> and you talk about even banks with good security i.t. can be hacked by their law firms. explain that. >> say your bank or your company has very good i.t. security. but somebody that your company does business with doesn't have very good security. they have a lot of your
5:27 am
proprietary information, particularly attorneys, so hackers go after them. >> security is not your security. it's the security of everybody else you deal with. >> exactly. >> okay. and that's a problem. how do you ensure that? it's out of your domain, isn't it? >> sure. i mean, this goes to the attention between the private sectors, including financial institutiones and others, but we have good i.t. security infrastructure and then you have the government that says, no, really, we're all vulnerable and more needs to be done and we need basic minimum standards and best practices that we all, from the law firms to the transportation companies and other critical infrastructure programs that we all take to take on top of cyber threat and security. there's also we say, hey, we need some rules of the road.
5:28 am
>> are we going to get security legislation that improves the rules of the road? and it's been stalled. >> that's been the big question for the last year or two. the tension between the private sector is we are doing enough and we don't want any more government regulation and we don't want to be told how to practice i.t. security. the government says, we're too vulnerable. we can't afford in addition not to do this. it's like seat belt laws or earthquake codes. >> thank you for joining us. still to come, the u.s. earnings season begins in earnest this week. but analysts have been lowering the bars, slashing expectations for the banks and techs. which sectors will shine through?
5:29 am
5:30 am
5:31 am
this is "worldwide exchange." i'm ross westgate. the s&p 500 sitting at a new five-year high as investors turn their focus on the fiscal cliff, the fundamentals earnings season kicking off this week. banksing stocks on the rise in europe. the basel committee bow toes pressure from the financial services industry and relaxes rules to global liquidity requirements. and air france khl denies reports it's looking to take over alitalia. a at a lia nevertheless has been soaring on expectations over a deal.
5:32 am
and if you're just joining us, good morning to you here on cnbc. sitting at five-year highs. no surprise to see us a little bit below fair value at the moment on the futures. we're currently, what, 4.5 points below fair value to the s&p. the nasdaq is currently some 6 1/2 points below fair value and the dow at the moment is 32 points below fair value. we have european shares closing up at 22-month highs on average on friday. the ftse up .5% today. it's down a third of a percent. the xetra dax down nearly .5%. the cac 40 down .5%. the ibex up around .1%. earnings season begins anew in the u.s. this week.
5:33 am
alcoa kicking things off with fourth quarter results after the close tomorrow. some analysts think earnings could lead to a bumpy start. forecasters expect numbers to rise 278% in the first quarter. ashrani, good morning to you. thanks for joining us. >> good morning to you. we saw quite a big flashing of preearnings announcements, as well. what's the impact of that? >> well, what's the impact of is that is that earnings have come down significantly. a month ago, they were almost double what they are to be now. we were at about 5%. now we're at about 2.8%, 3%. i think there's a lot of uncertainty in the markets right now. i think companies are jumping at the -- champing at the bit to come out and say, hey, things
5:34 am
don't look good. things are uncertain now. and as a result you're seeing about 2.5% -- i'm sorry, 2.5 companies for every negative preannouncement to one for every positive preannouncement. but i think that could lead to some good surprises is in the earnings season, as well. >> and where are the financials going to be in this? good news for them today. basel iii, they're relaxing the regulations and rules. what do they look like from an earnings perspective? >> we're looking at banks to be up about 3.5%. if you access the insurance companies, so the financial sector as a whole, we're looking at a 15.5% ride. if you access the insurance companies who are dealing with sandy ask some other issues, you're looking at about 40%. so you're going to really expect the strong earnings season. so the first half of the earnings season might be stronger than the second half. whereas the second half of the earnings season is labeled with technology. the first half is technologies and generally overall financial
5:35 am
earnings are expected to be stronger year over year. telecoms will do fairly well. >> is that? >> i think a little easing and pricing pressure. there's still a global demand for telecom services. but i think that sector is quite immune. they do have some pricing power in that sector, as well. it's a little bit less into the consumer pressures, than let's say a technology services company. >> how much will -- if we get that sort of performance from telecomes and financials, how much does the sentiment they generate pull over, do you think? >> i think overall, earnings are going to surprise. i think if you're looking at a number around 3% right now, i think once all companies report we'll probably get around 5%, 5.5%. if you look at it last quarter, we're looking at 5%. i think more than this quarter, i think what people are going to say about this, 2013 is very important to the markets right
5:36 am
now. i think more than what companies do right now. so i think what the language and company reports is going to be extremely critical to investor sentiment. we're dealing with a lot of head winds with the debt ceiling crisis and some of these other fiscal policies taking place, be it the health care regulations here in the u.s. i think investors are really going to be focusing on what companies are saying for 2013. >> and what are companies like to do with their spare cash? are we going to see more buybacks? >> that's a good question. i think buybacks is probably the trend of the times right now more than the m&a when companies had a lot of cash to spare. if you look at 2000, 1999 or maybe even 200 a, 2006, you were seeing m&a. now i think you're seeing more buybacks. that's a trend of the times, like you said. >> where is that going to leave the p/e ratios?
5:37 am
>> the s&p right now is trading at 4.9 outs of forward multiple. you know, you can look at it as stocks being cheap right now. you can really make that argument. if you're saying that we've come out of the great recession and we're in that area where we're start to go rise in terms of our economic prowess, then you could say stocks are cheap. if you're saying that we're still -- we still have a lot of problems, then you can make the argument stocks are expensive. i think that's where you're getting. one side is telling you, hey, you know what? stocks is a great place to be. i think that multiple is not ridiculous, but it depends on what your economic outlook is. >> and that is what makes the market. good to see you. thanks, a shwani. have a good day. >> you, too. thank you very much. back to france, the budget minister, jerome kazak -- i think you see it likes that --
5:38 am
says france's government will not raise taxes for the rest of his five-year term. it was designed to incite a bit more prudence and decency in a few very rare executives. so maybe they weren't targeting high profile people like gerard de pardeau. there he is meeting vladimir putin. he received his russian passport and a hug from the president. and he's not easy to hug, ger d gerard, is it? he's a big man. >> it's not probably. he might be a russian citizen, but will have to appear in a court in france for drunk
5:39 am
driving. he had an accident with another motorist and that's the reason why he will have to face a french court tomorrow. now, back to the french budget minutester, he declined to confirm this weekend that more people were leaving the country as a result of his pollses. but still, it's not directly linked to gerard, but the government is planning not to increase taxes for the next few years. asking too more would be asking too much and that individual companies would need more stability. it confirmed that the government was working on a plan to replace
5:40 am
the 75% income tax that was rejected recently by the constitutional court. but probably they won't be 75% rates because the government would face the risk of being rejected again with the plan. they did not say exactly what was the plan, but probably the 75% tax on wealthy people is not the whole story. >> no. what was the cut in rate? what did you have to earn? >> that was a mix-up shore on tax for 75 million people. so you have the right to earn 1 million euros, but everything that is over 75,000 -- >> would be a tax on anything owner 175%. >> thank you for that, stephane. now gerard depardiue is now the
5:41 am
holder of a russian passport. we've been asking if you had to go to a country of exile, what would be the country of your choice? one viewer said he would choose rio de janeiro. not sure what the tax rates are there. still to come on the program, is online tv the future for tech companies and how will they capitalize on the new trend? we'll get some analysis, right after this. >> with hotwire's low prices, i can afford to visit chicago for my first big race and l.a. for my best friend's wedding. because when hotels have unsold rooms, they use hotwire to fill them. so i got my hotels for half-price! >> men: ♪ h-o-t-w-i-r-e ♪
5:42 am
5:43 am
5:44 am
these are your headlines. if you're just joining us this morning, u.s. investors turn their focus from the fiscal cliff to the fundamentals as the s&p starts the week at a fresh five-year high. regulators watered down bank liquidity rules giving a boost to financial stocks in europe. and no takeover for alitalia. air france denies the reports that it's to buy the flagship carrier. right. now, for many supporters of college football today cannot go fast enough. the clock is ticking down for tonight's college showdown as notre dame faces off against the
5:45 am
alabama crimson tide in the bcs championship game in miami. now, even i know that this is a big deal and joining us for more is my old colleague. do you feel like old times, brian, getting up this early to come and sit in that chair? >> i do. in fact, i have no voice, too. it's like old times when i couldn't talk. listen, do you actually know notre dame and alabama? >> i do because i did -- i talked about this on friday. so i know that -- well, i do get a sense of the history of this. is this going to be the biggest ever money spending college football game? >> well, i mean, you guys know wagering, right? this should be a $2 billion bet on this game. it's on in over 100 countries in six continents, so i guess no tvs in antarctica. i don't know what the equivalent would be in the uk. but it will be on tv. alabama has won two of the last
5:46 am
three national titles. you have notre dame, which is the branded football program in this country. they've won 11 national titles. they haven't won one since 1988. this is a big deal. it's like two titans going at it. they expect 30 million americans will tune into this game. and so it is a big deal all across the board. they're not selling ads like the super bowl, mind you, but they're still selling a million plus for 30-seconds slot for a college game is a big deal. >> and they both have huge traveling supporters. even if you don't have a ticket, i'm guessing miami is going to do automatic out of this. >> yeah. you know, the interesting thing, ross, is that alabama, it's the third national game they've been to. tickets in terms of going to the game are less expensive than they have been in years past. some alabama fans are like, been there, done that. they aren't packing up the rv like maybe they did last year or two years ago.
5:47 am
the thing with football in the states, i don't know what it's like for soccer for you guys, but the truth is is that going to the game isn't quite as fun for millions as it is to watch it on your couch because it's such a good tv game. and that's sort of this balance of football in the states right now is that, listen, you're so comfortable on your couch, you can watch and hearing everything, get all the analysis and get to the fridge during the commercial break. >> yeah. to be fair, it evolved out of rugby football. i don't think they should have allowed you to throw the ball forward. >> that was a mistake? >> that was a mistake. you can only toss it backwards, not forwards. >> but it is funny. i've had this conversation with a lot of people like, nfl football, american football still hasn't caught on and they've talked about wanting an nfl team in london. they've talked about the jacksonville team going over there. but there's a lot of people that think it's just never going to catch on outside the u.s. because of the helmets, the pads, and maybe because of the
5:48 am
passing, ross. i don't know. >> yeah. we like it backwards, not forward. exactly. you could do that, though. i see a few teams that have done those plays, haven't they? instead of the quarterback, they can do it rugby style. >> you know, i'm going to get a cnbc camera and when you come to the states, we're going to go to a football game. we're going to film your reaction and analysis of american football. >> okay. good. march. and there's no nfl in march, is there? >> no. no. we'll find a game for you. >> all right. what happens in march? is there any baseball on then or do i have to go to basketball or something? >> basketball. >> thanks, brian. hope the voice gets better. >> still to come on "worldwide exchange," are the bulls going to stick around for more? we'll get some answers. what are you doing?
5:49 am
nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office. sven gets great rewards for his small business! how does this thing work? oh, i like it! [ garth ] sven's small business earns 2% cash back on every purchase, every day! woo-hoo!!! so that's ten security gators, right? put them on my spark card! why settle for less? testing hot tar... great businesses deserve great rewards! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? here's your invoice. ♪
5:50 am
♪ ♪ [ male announcer ] don't just reject convention. drown it out. introducing the all-new 2013 lexus ls f sport. an entirely new pursuit. [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the aerospace industry in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing.
5:51 am
right pt on the agenda for the states, it's a lighter week for numbers. tomorrow we'll get november consumer credit. alcoa kicks off earnings season with its fourth quarter results after the close. friday, trade deficit and import prices for december. the key thing is, of course, the s&p sitting at a five-year high after the biggest weekly gain in a year. what happens now? michael gurka joins us. mike, happy new year to you. can the s&p kick on here or is it natural for us to take a pause? >> well, ross, i think it's going to be an easy equation this year for the s&p with the growth projection. things look bullish. i would not get in its way. if you look for single teen returns for the year, that's about 1% a month.
5:52 am
if we get big moves early in a month and you see thing close to 1%, i think that's when the market starts to level off. >> yeah. i mean, look, we obviously have some relief over, you know, fiscal cliff. and take winds in china and europe as the landing crisis has diminished somewhat. so here we start ahead of the earnings season. is that a kicker or a bit of a holder? >> well, i think it actually -- it will clearly be a kicker because the market will be thirsty for any positive news for more after we've had such a rally. you know, ross, this week what seems like the biggest concern for move markets is look what happened in yields in the u.s. treasury. up 190 as we speak. that is a 30% move in less than three weeks. if the bond markets can get that robust, all of a sudden we have this quandary of prices and bonds going in these different
5:53 am
directions. i think we have to keep an eye on that and how the dollar looks. another brick in the wall. >> two things there, michael. first of all, on bond yields, if they move higher, there will be a lot of investors who have very long bond markets that think maybe it's time to switch out, right? do you see this trigger happening? is there any indication that might happen? >> i think that would be a little premature. but people with that mind-set or traders with that kind of horizon on bond yields on when they want to start moving assets, i think it's clearly two 2% or maybe somewhere near an eighth or so, i think you have to go over the hump on the big round number first. >> and the dollar, can the dollar become cyclical this year? we had to get earlier that it could become a fiscal play rather than a defensive play. >> it could be, but that's going be a momentary play there, without question. i think the u.s. dollar still has a lot more weakness in the cards and i think that this
5:54 am
administration in the states is clearly shown that in the last four years. so i wouldn't be surprised to see the sterling continue to keep the strength here above 160. >> mike, good to see you. have a good day there in chicago. mike gurka from spectrum international. in the web tv services promise to revolutionize the broadcast companies. intel's latest play for web tv is being delayed. some say the groups should be focusing on mobile, instead. forta, thanks for joining us. why are intel wrong? have they missed the boat on internet tv? >> well, the reason that it's going to be a nonstarter is very simple. the business has shifted from hardware to software and intel doesn't have any content to put on their virtual cable television program that they announced last week. >> right. so there's no point.
5:55 am
>> there is very little point. they're in the same boat -- you know, remember we had over the last couple of years, google tv. we're all waiting and waiting and waiting for apple tv. sony tv, never happened. the switch to cable and to video over the internet is actually happening, but it's all driven by content, not by software and certainly not by intel's chips. where intel does have a huge, huge advantage, though, going forward, is in the mobile, as you mentioned. they are partners with google in the android system, which has 68% market share of smartphones and other portable devices. and they've got to ramp up their capabilities and innovations in the mobile area if they're going to hold on to the market dominance that they've enjoyed over the last decade. >> what is interesting, though, what i do know that you have tvs
5:56 am
that have been sold over christmas, over the last year, internet enabled tvs and samsung, as seems to be leading that market are faring very well. so who is making the chips for internet enabled tv. who is doing that? >> well, a lot of the chips are proprietary. samsung uses their own chips, for example, in their flat screen tv set. there isn't any proprietary advantage among chipmakers to get into the tv set business. and intel made a misstep, i believe, in announcing that they're putting out their virtual cable in a -- the form of a set top box. set top boxes are going away. the chips in mobile devices, like the ipads and smartphones are going to be the remote controlled devices of the future that brings video over the internet and into your flat screen tv. you don't need to have a set top box. you may not have to have a chip in the tv set the way samsung and lg and sharp and others are
5:57 am
moving. >> there i was, the day after christmas watching the bouncing abby christmas special on catch up on my tv, right? that makes me a new fangeled user, as media? >> well, you've been talking about the big football game here, the notre dame/alabama game. i've been watching all weekend the nfl playoff games on my ipad and i'll be watching the alabama/notre dame game on a smartphone or on an i had pad. >> who is going to win? quickly. >> i like alabama. i'm from alabama. i think they've got the edge. >> all right. thanks for that. you have a good day there. we'll hope alabama wins for you. that's it for "worldwide exchange." "squawk box" up next. ♪ reach one customer at a time? ♪
5:58 am
or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪ whatever your business challenge, dell has the technology and services to help you solve it.
5:59 am

Worldwide Exchange
CNBC January 7, 2013 4:00am-6:00am EST

News/Business. Ross Westgate, Kelly Evans. Ross Westgate and Kelly Evans consider the business stories that have global significance. New.

TOPIC FREQUENCY U.s. 47, Us 28, Europe 21, France 16, S&p 12, Italy 12, China 11, Alabama 10, Ross 9, Hoveround 8, India 8, Basel 7, Spain 7, Alitalia 6, T. Rowe 4, Kevin 4, Samsung 4, Lg 3, Alcoa 3, Cnbc 3
Network CNBC
Duration 02:00:00
Scanned in San Francisco, CA, USA
Source Comcast Cable
Tuner Virtual Ch. 58 (CNBC)
Video Codec mpeg2video
Audio Cocec ac3
Pixel width 528
Pixel height 480
Sponsor Internet Archive
Audio/Visual sound, color

disc Borrow a DVD of this show
info Stream Only
Uploaded by
TV Archive
on 1/7/2013